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WoodMac: Murphy Oil's US$2.1 billion sale of Malaysian portfolio is biggest O&G deal in SEA in over 5 years

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Oilfield Technology,

Murphy Oil has announced the US$2.1 billion sale of its Malaysian portfolio to Thailand's national oil company PTTEP. The all-cash deal, is subject to an additional US$100 million contingent payment based on certain exploration drilling results up to October 2020.

Wood Mackenzie research analyst, Alex Siow, comments on the deal:

"The deal underscores Murphy's strategic pivot to the US Gulf of Mexico, US unconventionals and Latin America exploration, and brings to an end Murphy's 20 year involvement in Malaysia, during which time it discovered and developed the country's first deepwater oil field, Kikeh.

"Like many Asian national companies, PTTEP suffers from a maturing domestic portfolio. To improve its production outlook the company has been on the hunt for licence extensions and counter-cyclical M&A opportunities, with a focus on Southeast Asia.

"The proceeds from the sale will go to Murphy’s unconventional assets in the Eagle Ford, Montney and Duvernay in North America. The company will also initiate a US$500 million share buyback programme. Focus will now turn to Murphy’s new cash engine – the Gulf of Mexico, where the company established a JV with Petrobras in late-2018.

"Murphy's Malaysian assets strengthens PTTEP's near-term production profile, and reinforces its "Coming Home" strategy, following its winning bids on the Erawan and Bongkot contract extensions in late-2018. The deal also provides exposure to important growth resource themes – deepwater and LNG – which the company has identified as core.

At US$2.1 billion, this is the biggest oil and gas deal in Southeast Asia for over five years, and supports our view that 2019 is set to be a big year for M&A activity in the region. Murphy's Vietnam and Brunei positions will now become divestment candidates, but its unclear whether PTTEP will continue its Southeast Asia spending spree."

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